JEDDAH – The continuing expansion of the Saudi economy should underpin the steady growth of the insurance sector.
However, the main catalyst for growth in recent years - the rise of compulsory health insurance remains miniscule, the “Saudi Arabia Insurance Report Q3 2011” said.
Of the G20 economies, few have experienced growth in their insurance sectors that could match that of Saudi Arabia between 2005 and 2010. Life premiums have soared from SR193 million to SR1.40 billion.
Non-life premiums have increased from SR4.96 billion to SR16.872 billion. The number of participants has grown. The vast majority of insurance companies that are active in the country have listed on Tadawul, the report said.
Moreover, Saudi Arabia’s insurers are required to operate according to the principles of cooperative insurance.
This means that, collectively, they form the largest Shariah-compliant insurance sector in the world. According to Ernst & Young, Saudi insurers accounted for $3.9 billion of global Takaful/Shariah-compliant contributions in 2009.
The second largest source was the Takaful operators of South East Asia, who received contributions of $1.5 billion; the third largest were the Takaful operators of the Gulf Cooperation Council (GCC) countries outside Saudi Arabia. Globally, contributions in 2009 amounted to $6.9 billion.
According to another report “Saudi Arabia Insurance Market to 2012”, protection & savings and health insurance are the fastest growing insurance lines in the country, with health insurance accounted for around 50 percent of the overall insurance market at the end of 2009.
The health insurance sector is expected to grow at fast pace on the back of increasing involvement of private companies and the obligation for foreign nationals and foreign pilgrims to buy insurance covers, it said.
Moreover, the general insurance category has shown substantial growth despite being heavily hit by the financial crisis. It is expected to grow at a CAGR of more than 24 percent between 2010 and 2012 owing to rising motor and energy insurance. Property and aviation insurance are expected to emerge as the fastest growing general insurance segments over the forecast period.
The motor insurance segment is projected to grow at a CAGR of 30 percent between 2010 and 2012. With the strong prospective growth in auto sales, the premium of motor insurance will increase as vehicle insurance has been made compulsory. – SG/QJM